Hobbit stays in New Zealand - for a price

The Hobbit will be made in New Zealand, Prime Minister John Key announced today, after the government promised to change labour laws and offered a tax break for the $670m film project.

The decision follows weeks of uncertainty over whether filming of The Hobbit would be moved to Europe which culminated in crisis talks between government ministers and Warner Brothers executives.

Key announced to a press conference:

"I am delighted we have achieved this result. Making the two Hobbit movies here will not only safeguard work for thousands of New Zealanders, but it will also follow the success of the Lord Of The Rings trilogy in once again promoting NZ on the world stage."

As a result of the negotiations with Warner Bros, the New Zealand government will introduce legislation tomorrow to clarify the distinction between independent contractors and employees in the film industry.

Filming of The Hobbit was thrown into jeopardy when a New Zealand branch of an Australian actor’s union tried to engage in collective bargaining over wages and working conditions. Warner and government officials have contended that collective bargaining with actors is barred by New Zealand law.

"The industrial issues that have arisen in the past several weeks have highlighted a significant set of concerns for the way in which the international film industry operates," said Key.

"We will be moving to ensure that New Zealand law in this area is settled to give film producers like Warner Bros the confidence they need to produce their movies in this country.

"This will guarantee the movies are made in New Zealand.”

Warner Bros will also be given a big tax rebate on The Hobbit films which will mean up to an extra US$7.5m per movie, subject to their success.

The Government and Warner Bros agreed to work together in a "long-term strategic partnership" to promote New Zealand “as both a film production and tourism destination," said Key.

"My Government is determined to use the opportunity that the Hobbit movies present to highlight New Zealand as a great place to visit, as well as a great place to do business.”

The Government will offset US$10 million of The Hobbit’s marketing costs as part of the strategic partnership.

Is it right for the New Zealand government to offer such a big tax break and change labour laws to secure The Hobbit? Tell us what you think.